Thursday, August 17, 2017

Quick commentary on today's action...

Told you not to hold your breath.Took a moment and added the following to my market diary this morning:

8/17/17

Well, so much for the VIX staying calm. As I type, the
S&P 500 Volatility Index is up 25% on the morning. The Dow and the S&P
themselves are flirting with 1% declines. Clearly, although 1% index declines
are nothing to get excited about, there’s fear in the market today – if, that is, the VIX
is any indication. Surprisingly, however, gold and bonds are only up roughly
.5% each. That wouldn’t be your definition of panicky risk-off action…

Headlines are suggesting that recent political turmoil is calling into question what might otherwise be (save for the protectionism) a pro growth policy agenda. An infrastructure bill, for example, was to be a slam dunk going in.

The longer-term good news with regard to infrastructure is
the global setup. Huge such investment is just beginning throughout much of the
developing world. This bodes well for the industrials and materials (in
particular) exposures in our portfolios. Operative words (in light of present political uncertainty) being “longer-term.

I should note that 2017 has thus far – to say the least – seen
unusually low volatility. For whatever the reasons, a reversion to the
volatility mean should be expected.

In terms of the macro economic trends; the financial stress indicators,
at this point, are a long way from
signaling a heightened degree of recession risk.

In terms of equity market trends; as we see them the bull
market remains very much intact and, thus, for the time being, this would be
volatility to ignore…